Misbehavior and Mistake in Bankruptcy Mortgage Claims: Some Caveats Regarding the Porter Study

Abstract

This Article reviews the comprehensive empirical study of the bankruptcy mortgage foreclosure process conducted by Professor Katherine Porter and subsequently published in 2008 in the Texas Law Review. The results of her study, which analyzed 1,768 proof of claim submissions filed in a sample of 1,733 Chapter 7 bankruptcy proceedings, strongly suggest that there is a pervasive failure on the part of mortgage creditors to meet all of the formal documentation requirements for filing such bankruptcy claims. This documentation failure arguably impedes many mortgage debtors or bankruptcy trustees from reviewing these claims for their accuracy.

Porter's conclusion that the itemization statements included in even formally complete proof of claim filings are often confusing enough to prevent debtors and trustees from meaningfully evaluating their accuracy, however, is less well grounded. In addition, her data does not unambiguously support her conclusion that there is likely widespread and cumulatively significant overcharging of mortgage debtors being facilitated by these proof of claim documentation deficiencies. These data results are also consistent with more benign explanations of the pervasive discrepancies she identifies between creditors' and debtors' perceptions of the amounts owing. Porter's recommendations for reforms in the bankruptcy mortgage foreclosure process consequently cannot be properly assessed without further research establishing the extent of such creditor abuse.

Keywords: bankruptcy mortgage foreclosure process, bankruptcy, Chapter 13, Chapter 7, mortgage foreclosure law, mortgage creditors, proof of claim, mortgage creditor abuse